How to Avoid the Same HR Mistakes Our Clients Make

 Employers in all economic sectors must comply with a dizzying array of laws, regulations and doctrines that set minimum employment standards, create employee entitlements, impose employer obligations, or incentivize certain HR practices. Press coverage of alleged employer mistakes or violations is legion, and it has done much to educate today’s workers about their rights and their opportunities to demand damages from their employers. In this climate, wise employers look for proactive ways to manage their employment law risks, so as to prevent the costs, distractions and reputational harms associated with employee claims.

As employers, law firms have the same compliance responsibilities as other similarly sized employers. However, as legal experts, a law firm’s non‑compliance can be even more damaging to the firm’s reputation than the usual employment law matter. Hiring practices and wage-hour law compliance are two areas where employers frequently confront legal claimsoften on a class-wide basis. This article discusses some commonly encountered issues and the legal frameworks that control their resolution.

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  • Risky Inquiries or Practices During the Hiring Process.

Most employers understand they can’t question applicants about legally protected traits or activities, such as race, national origin, religion, disability, marital status, workers’ compensation claims, etc. Similarly, most employers understand they would risk disparate treatment discrimination claims if they asked only people of a certain race, ethnicity or gender about their criminal or credit histories. Yet many employers use hiring practices that have attracted regulators’ attention as they seek to prevent “systemic discrimination,” or practices that may have a statistically significant adverse impact on members of a particular demographic group. These potentially risky practices include:

  • Standardized tests
  • Criminal history inquiries
  • Background checks
  • Credit checks

A disparate impact claim involves a facially neutral policy with a statistically significant adverse impact on a protected class. If such an impact is shown, to avoid liability, the employer must show the policy is job-related and consistent with business necessity. Even so, the employer still can be liable if the claimant shows the availability of alternative practices the employer declined to adopt although they serve the employer’s legitimate goals as effectively as the challenged practice but with less adverse impact.

Each hiring practice listed above may sometimes have a disparate impact on a particular race, ethnicity or sex. If so, the EEOC has long opined that the employer must demonstrate the practice’s job relatedness through a professional validity study. See http://www.eeoc.gov/policy/docs/qanda_clarify_procedures.html (1979 Q/A about the EEOC’s Uniform Guidelines on Employee Selection Procedures). However, decades later, employers sometimes use standardized tests without considering whether the test has a disparate impact and, if so, whether the test has been validated for use in the employer’s situation.

The EEOC and other anti-discrimination agencies have long taken the view that criminal history inquiries may have a prohibited disparate impact on certain minority groups. In April 2012, the EEOC reaffirmed its view that inquiries about conviction and arrest records can result in disparate impact discrimination, particularly against African-Americans and Latinos. See http://www.eeoc.gov/laws/guidance/arrest_conviction.cfm. This guidance urges employers to use a narrowly tailored approach when screening for criminal conduct, instead of simply excluding people from employment based on any criminal record. As a best practice, employers should engage in individualized assessments when considering criminal history, considering not only the type of job at issue, but also the nature and gravity of the person’s criminal offense or conduct and the amount of time since the conduct occurred and/or the sentence was completed.

“Ban the box” legislation is growing in popularity at the state and local levels, with several states and localities adopting provisions in recent years that regulate private-sector employers. The particulars of these laws vary from one jurisdiction to the next, but they generally require removing criminal history questions from job applications and conducting individualized conviction history inquiries only later in the hiring process. For law firms with multiple offices, the compliance complexities associated with this expanding legislative patchwork may counsel for simplifying the employer’s application process by eliminating initial written inquiries about criminal historyreserving this topic for evaluation only after the firm has made a conditional employment offer.

Finally, employers often conduct background checks or credit checks through third-party vendors.

  • This typically triggers the need to comply with the federal Fair Credit Reporting Act’s provisions requiring written consent to the check and establishing adverse action notification procedures. The Federal Trade Commission, which administers the FCRA, and the EEOC recently issued a joint publication about what employers need to know in this area: http://business.ftc.gov/documents/0487-background-checks-what-employers-need-know.
  • In addition, several states restrict employers who wish to use credit information when making employment decisions. Employers need to be aware of and comply with any stricter state law standards for credit checks.
  • Succumbing to Wage and Hour Law Pitfalls.

Federal wage and hour legislation dates back to the New Deal, when the Fair Labor Standards Act (FLSA) was enacted, and many key FLSA regulations originated in the 1940s. Mistakes are easy to make when applying the complex, often-outdated requirements of federal and state wage and hour laws. Further, many wage-hour cases involve broad policies or practices that may qualify for class-wide litigation, magnifying the employer’s potential exposure. Suffice to say thatalthough wage-hour law may seem archaicthe stakes of non-compliance can be high.

Law firms are not immune to these issues. Key areas where your firm may be vulnerable include (1) employee misclassification, (2) accurately recording all work time for non‑exempt employees, and (3) complying with state meal and rest break requirements, where applicable. More specifically:

  1. Classifying Employees as “Exempt” or “Non-Exempt” for Overtime Pay Purposes.

    When an employer classifies an employee as “exempt” from overtime, the employer bears the burden of being able to prove that the employee meets all requirements for the exemption, which often are vague or complex. Law firms should pay particular attention to their classifications of the following types of employees:

  • Paralegals: Generally, they may not be properly classified as exempt from overtime pay requirements. A 2005 DOL opinion letter provides a detailed discussion of the relevant considerations under the FLSA. See http://www.dol.gov/whd/opinion/FLSA/2005/2005_12_16_54_FLSA.htm  (Note that some states, such as California, may have stricter exemption standards than the FLSA. If so, the firm must follow the most employee‑favorable standards applicable.)
  • Administrative staff: Firms must ensure that any employees classified as exempt on this basis truly qualify for this often-misapplied exemptionincluding, for example, its Delphic requirement that the employee’s “primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.” See www.dol.gov/whd/opinion/FLSANA/2003/2003_02_14_1NA_FLSA.pdf (concluding that a law firm administrative assistant did not qualify for the administrative exemption despite having duties requiring education and expertise far beyond that of other support staff).
  • Lawyers doing document review or other low-level work: An emerging issue to watch involves whether document review lawyers qualify as exempt professionals. A few law firms have faced suits contending that such lawyers are not truly engaged in the practice of law, which is one way to qualify as an exempt professional.  See 29 C.F.R. § 541.304. And law firms using contract attorneys for document review have been sued as “joint employers” with the vendor that supplied the contract attorneys.

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  1. Keeping Track of All of Your Non-exempt Employees’ Time Worked.

    With the evolution of our work lives from last century’s traditional offices to today’s technology-based practices, fulfilling this fundamental employer responsibility has grown increasingly challenging. Employer timekeeping practices must capture 100 percent of each non-exempt employee’s time worked, so that the employee may be fully compensated. An employer that fails to keep accurate time records may bear a heavier burden in defending claims of off-the-clock work, as the firm will be required to disprove the employees’ evidence of the extent of their work.

Consider whether you need to adjust your practices to capture the time spent on these common scenarios:

  • Non-exempt employees remotely using firm-provided smartphones or other devices for business purposes outside of normal working hours;
  • Similar remote work associated with a firm’s “bring your own device” (BYOD) policy;
  • Employees spending time booting up their computers at work before they can log into the electronic system used to track their time; or
  • The converse scenario at the day’s end: signing out of the timekeeping system but then needing to boot down the computer.
  1. Complying With State Meal and Rest Break Requirements, Where Applicable.

    Although the FLSA does not require employers to provide or allow any particular meal or rest breaks, a number of states have strict legal requirements about breaks. DOL’s website provides helpful lists of such jurisdictions, available at http://www.dol.gov/whd/state/meal.htm, and http://www.dol.gov/whd/state/rest.htm. Where break requirements apply, employers must attend to the details of compliance, such as the timing and the duration of breaks, or risk legal claims that often are asserted on a class‑wide basis.

The subjects discussed above are merely tips of numerous employment law icebergs around which law firm employers must navigate, like other employers. Remember that employment law compliance generally requires knowing and complying with the most employee‑favorable provisions. In addressing the numerous employment law issues, lawyers who manage law firms not only minimize their firms’ risks but gain a deeper appreciation for the challenges that confront our clients.

About the Author

Karen P. Kruse (@KarenPKruse) is a Shareholder in the Seattle office of Jackson Lewis P.C. (@JacksonLewisPC). She has practiced management-side employment law since 1991, with a balance between litigation and employer counseling. She can be reached at (206) 405-0404 or Karen.Kruse@jacksonlewis.com.

 

(Image Credit: ShutterStock)

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